Monday, March 09, 2009

Collective bargaining coercion [updated]

“I don’t buy the argument that providing workers with collective-bargaining rights somehow weakens the economy or worsens the business environment,” says the Obamessiah in the New York Times. “If you’ve got workers who have decent pay and benefits, they’re also customers for business.”

The President’s statement reveals a great deal about his understanding or, more correctly, lack of understanding of economics, says George Reisman. 

In saying, “I don’t buy the argument that providing workers with collective-bargaining rights somehow weakens the economy or worsens the business environment,” President Obama confesses to not knowing that collective bargaining raises prices and causes unemployment.

Reisman explain why in his latest blog post: “Change” Under Obama: From Dumb to Dumber and From Bad to Worse.

Take-home messages?  They include:

  • The imposition and maintenance of collective bargaining necessarily depends on compulsion and coercion…
  • “Success” is measured in terms of the rise in wage rates that it achieves… Precisely this “success,” however, is the cause of major problems. The first is that higher wage rates reduce the quantity of labour that any given amount of capital funds can employ…
  • Higher wage rates also serve to raise costs of production and thus the selling prices of the products that the higher-paid workers are producing. These higher selling prices reduce the quantities of the products that buyers are able and willing to buy…
  • The unemployment that collective bargaining causes is what explains why it is necessary to resort to coercion against wage earners in order to maintain the system. The self-interest of the unemployed is to find work, and to accept lower wage rates as the means of doing so. And taking advantage of that fact is to the self-interest of employers. Thus there are two parties, unemployed workers and employers, whose self-interest lies with a reduction in the higher wage rates achieved by collective bargaining…

“Unfortunately,” Reisman concludes, “it does not seem very likely that Mr. Obama will ever learn any of this. He appears to be so charmed by the use of compulsion and coercion that he and his supporters in Congress are ready to unleash a reign of outright mass intimidation...”

UPDATE: Watch the Dow collapse as American investors realise “it’s a War on Prosperity, and that it seem deliberate.”  Sure, correlation is not causality … but it all looks pretty compelling: The President's Radicalism is killing the Dow. [Hat tip Tim Blair]

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1 Comments:

Anonymous matt b said...

“If you’ve got workers who have decent pay and benefits, they’re also customers for business."

Christ, this is economic ignorance 101.

I recall a skit taking the piss out of George Bush. In it, "Bush" (played, I think, by Will Ferrell) argued that higher numbers of people on welfare staying at home and watching TV all day increases advertising revenue, and so its good for the economy.

Gave me a good laugh.

That is the very same argument Obama just mounted.

This would be frightening enough if Obama was in charge of the US government as it was this time last year. But now he's in charge of a government that controls or is about to control the banks and Fannie and Freddie. That means his ignorance can do even more harm than before.

God, someone, anyone, help us all.

3/09/2009 05:57:00 pm  

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